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Boston-based Liberty Mutual has agreed to pay $2 million to Connecticut and $5.5 milion to New York as part of a multimillion-dollar settlement to resolve allegations that it rigged bids and paid kickbacks to agents who steered customers to the insurer’s products, officials said Thursday. Liberty Mutual admitted no wrongdoing.

Connecticut Attorney General Richard Blumenthal announced the settlement Thursday. It stems from a 2006 lawsuit he and former New York Attorney General Eliot Spitzer filed against the company, part of a nationwide investigation into bid-rigging in the insurance industry.

They had accused Liberty Mutual of making payoffs to insurance brokers and independent agents to steer customers to Liberty Mutual’s products. That practice cheated customers out of a chance to get the lowest-priced and most suitable insurance coverage.

“Liberty Mutual’s conduct was reprehensible, illegally increasing insurance premiums for consumers and businesses and undermining the free market,” Blumenthal said Thursday. “The company brazenly broke the law using underhanded, unethical and illegal methods to rip off its customers.”

Liberty Mutual confirmed the settlements in a statement Thursday. It previously had said the actions were committed by two rogue former employees and that it would fight the allegations in court.

“We’ve always maintained Liberty had done nothing wrong,” the company said in the statement. “At this stage, we think it better to pay these relatively small amounts and put the matter behind us.”

Blumenthal said Thursday that the Liberty Mutual case was Connecticut’s last pending legal action from the investigations, in which settlements already have been reached with Marsh & McLelland, St. Paul Travelers, Aon Corp. and others.

The lawsuits quoted e-mails between insurance companies in which Liberty was asked to provide higher “fake” or “protective” bids after being told the bid of a competitor that was intended to win the contract.

The lawsuit claimed one of these transactions allowed American International Group Inc. to increase its premium by 20 percent with the same client.

Liberty Mutual said in 2006 that it had tried to resolve the allegations over the previous two years, but that Blumenthal’s and Spitzer’s settlement demands were “excessive and unreasonable, both in terms of magnitude and in their demands that we change legitimate business practices in states outside their legal jurisdictions.”

The company said its conduct was “appropriate and lawful.”

“Unfortunately, two former lower-level employees seriously violated our trust and our standards of conduct in their quotation activity,” the company said. Both employees resigned before the 2006 lawsuit was filed. e